Europe open: Shares rally despite bond market turmoil
By Frank Prenesti
Date: Wednesday 03 Sep 2025
(Sharecast News) - European stocks rallied at the open on Wednesday, after turmoil in the bond markets over fiscal stability in several countries hit sentiment in the previous session.
The pan-regional Stoxx 600 index was up 0.49% to 545 in early deals. Germany's DAX was 0.46% higher and France's CAC 40 rose 0.63%.
Shares fell on Tuesday as bond yields fell amid concerns over the fiscal outlook in major European economies. Britain's 30-year bond yield hit its highest level since 1998 with investors nervous about a potential £20bn black hole in the country's finances.
France's 30-year yield was at its highest since 2009 ahead of a no confidence vote in the government over its budgetary plans, while US Treasury yields jumped Tuesday after a federal appeals court on Friday ruled that most of his President Donald Trump's tariffs were illegal - raising the prospect of the government having to repay duties already collected.
"The selloff in long-duration bonds is fuelled by several factors: concerns over ballooning sovereign debt, political hurdles to fiscal tightening (France is a case in point), and structurally higher inflation pressures following the Covid disruptions and the ongoing trade war," said Swissquote Bank analyst Ipek Ozkardeskaya.
"Investors are demanding higher returns to hold bonds exposed to both inflation risk and elevated debt levels. Higher yields, in turn, push up borrowing costs for companies and weigh on valuations. As a result, equities and corporate bonds also kicked off the week on a weak note."
The flight from equities meant that gold once again climbed to a new record high, with the spot price of reaching $3,546.99 an ounce. Investors seeking a safe haven have pushed the precious metal to fresh highs for six straight days.
In equity news, Swedish electronics manufacturing firm Mycronic led the gainers while UK insurer and asset manager M&G fell as half-year profits missed estimates.
Reporting by Frank Prenesti for Sharecast.com
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